Small business: Study demographics before setting up shop

Q: What’s your advice on finding the best location for my new business?

A: Being in the right spot can make or break your business.

Even if you own a manufacturing business that ships products to customers rather than serving customers who walk in off the street, you need to be in a location where you can find good employees, where it’s easy for suppliers to make deliveries, where there’s ample parking and/or access to public transportation, and where there might be a restaurant or two nearby to take clients to lunch.

For an office or a retail or restaurant business that relies on customers being able to easily find you, or to see your shop as they’re driving down the street, it’s even more important to find a prime location.

Your first consideration might be cost, and working with a real estate agent can help you narrow down the parts of town you’re able to afford.

Keep in mind that even if you can afford a higher-end location, there’s a “trickle-down” effect. Will you have to charge higher prices to your customers to compensate? Will parking be more expensive? What about taxes?

If things go better than expected you can always move on when your lease is up, or open a second location down the road, but give yourself some wiggle room for the startup phase.

Of course, you’ll want to go for a more prestigious address if your business is intended to cater to the luxury market.

That’s an equally critical consideration: your target market. What do your potential customers look like in terms of age, gender, ethnicity, marital status, and income level? Where do they live, work, eat and shop?

You want to be close to where they are. To learn about an area’s demographics, start at the U.S. Census Bureau’s website at census.gov. Search by city to find info about an area’s population and economy.

You also can check with local chambers of commerce to see if they have demographic and lifestyle data about the localities they serve. Find a listing of chambers in the Texas Gulf Coast area at gulfcoastchamberexecs.com.

If you want to spend some money, hire a market research firm or consultant to do it for you.

Some experts recommend a way to choose a location without doing the research: Locate your business close to your biggest competitor. They will have done the research when they picked the site, plus you’ll benefit from their current marketing efforts.

Have you noticed, for instance, that where there’s a Home Depot, there’s typically a Lowe’s nearby? You’ll also frequently see restaurants in clusters or a row of retail shops.

A successful business brings traffic to the area, and by locating your business near one that’s already attracting customers, those customers will soon begin to notice you as well.

Jacqueline Taylor is deputy director of the Texas Gulf Coast Small Business Development Center Network, a partnership of the U.S. Small Business Administration and the University of Houston C.T. Bauer College of Business. Information is intended to provide general guidance only.